CVS 2001 Annual Report Download - page 12

In late 2001, we
anno unced o ur intention
to co nso lidate o ur
specialty pharmacy
business, Pro Care, into
PharmaCare Management
Services, Inc. This co nso lidatio n
better po sitio ns bo th co mpanies to
meet the g ro wing demand fo r co o rdinated PBM and
specialty pharmacy services.
PharmaCare Management Services is amo ng
the to p 10 full- service PBMs in the co untry, pro viding
a wide range of pharmacy benefit management
services fo r mo re than 12 millio n lives natio nwide.
Its c lients include managed care o rganizatio ns, self-
insured emplo yers, and third- party administrators.
Thro ugh its suite of co st co ntainment management
to o ls and risk-sharing arrangements, PharmaCare
helps clients deliver quality, co st-effective
pharmaceutical care.
Since its start in 1995, PharmaCare has delivered
rapid revenue and earnings gro wth, and that healthy
gro wth co ntinues. In 2001, PharmaCare acquired
United Pro vider Services. This acquisitio n added to
PharmaCare’s already significant presence in the
third-party administrator sec to r and co mplimented
its 2000 acquisitio n of ClaimsPro .
Pro Care is the largest integrated retail/ mail
provider o f specialty pharmacy services in the natio n.
Its missio n is to assist individuals who are taking
highly co mplex and expensive drug therapies to
treat such co nditio ns as o rgan transplant, HIV/ AIDS,
and genetic co nditio ns treated with bio tech
injectables such as infertility, multiple sclerosis,
and c ertain cancers.
Pro Care currently o perates 33 specialty pharmacy
sto res in 28 markets acro ss the United States,
primarily in o r near majo r medical centers. The
Co mpany supplements lo cal retail presence with
national mail- service capabilities. With this unique
integrated mo del and market leadership, Pro Care is
well positio ned to further entrench itself as America’s
#1 specialty pharmacy.
ProCare and PharmaCare— A Winning
Combination
Few PBMs today offer co mbined PBM and
specialty pharmacy services o f the caliber o ffered by
Pro Care. Mo st managed care co mpanies still secure
separate co ntracts fo r these services. But the
significant gro wth in co sts incurred by plans for
specialty pharmaceuticals
and the need fo r
administrative synergies
is driving demand fo r
co mbined PBM and
specialty pharmacy so lutio ns. PharmaCare in
co mbinatio n with Pro Care is well positio ned fo r this
emerging market dynamic. The $16 billio n specialty
pharmacy market is expected to gro w at an even
faster rate than traditio nal pharmacy due in large
part to the ro bust pipeline o f bio techno lo gy drugs.
Pro Care co nsolidated so me lo catio ns in early 2002
to fo cus its effo rts o n lo catio ns that pro vide a mo re
profitable pro duct mix. In additio n, to impro ve
efficiency, we will clo se o ne of Pro Care’s mail o rder
facilities, co nso lidating all specialty mail services into
the state- o f-the-art mail fac ility acquired in the
Stadtlander acquisitio n. Pro Care’s mail o rder facility
acts as a central suppo rt hub fo r the sto res, assisting
with reimbursement services as well as o ffering the
co nvenience of ho me delivery, depending o n custo mer
preference and geo graphic c o verage.
The similarities in the o peratio ns and missio ns
of PharmaCare and Pro Care c reate significant
o ppo rtunity for synergy as they merge into a single
o peration. We expect to benefit fro m a single
marketing and sales fo rce, and fro m co nso lidated
o verhead co sts.
The co mbination of PharmaCare and Pro Care into
a single o peration po sitio ns this new business fo r
greater lo ng- term growth po tential in special
healthcare services.
CVS Corporation
10
Helping People Is Our
ProCare, t he #1 specialty pharmacy business in America,
provides specially trained pharmacy st aff, convenient
locat ions near medical centers, and home delivery service
to pat ient s with int ensive drug therapies.